20 Feb Debt Settlement Companies Settle With FTC
Two debt reduction companies – Debt-Set and Resolve Credit Counseling, Inc. – have agreed to settle Federal Trade Commission charges alleging that they violated federal law by falsely claiming that they could reduce consumers credit card interest rates or the amount of their credit card debt.
Both companies sold debt reduction services through Web sites and television and radio advertisements with claims such as Reduce Debt Now and Eliminate Harassing Calls. When consumers called a toll-free number, the complaint alleged, they were encouraged to enroll in a debt consolidation program if their unsecured consumer debt was up to one month overdue, or a debt settlement program if overdue longer.
The companies falsely promised obtain lump-sum settlements, such as fifty cents on the dollar or 50 to 60 percent of consumers total unsecured debt, or to negotiate with creditors for lower interest rates. They also misrepresented that they would not charge consumers any up-front fees before obtaining the promised debt relief, and that participation in their program would stop creditors from calling or suing them to collect debt.
The settlement orders prohibit the defendants from engaging in the violations alleged in the complaint, and require them, when making representations about specific debt reductions they can achieve, to disclose truthfully key terms of the program: all fees and costs they charge, including when and how such fees and costs will be paid by consumers; the approximate time period before settlements will be achieved; and the fact that consumers balances typically will increase before settlements for all accounts are achieved. The defendants also agreed to standard compliance and reporting provisions that enable the FTC to monitor future compliance with the orders.
The settling defendants are Debt-Set, William Riggs, Leo Mangan, Resolve Credit Counseling, Inc., and Michelle Tucker. The settlement orders contain suspended monetary relief of $1 million. Mangan has paid $40,000, and Resolve Credit Counseling and Michelle Tucker have paid $350,000. If any defendant is found by the court to have misrepresented the sworn financial statements provided to the Commission, a $1 million judgment will be imposed, less any payments already made.
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